Despite less than half of small business’ having a sufficient capital safety net, only a quarter can name a risk facing their business, a new AXA report has revealed.
In their 2011 International Small Business Report, AXA looked into the issues currently affecting small business in ten different countries. The two main issues they outlined were the need for small and medium sized enterprises (SME’s) to extend their focus from finance needs to business risks, and the need for more business continuity planning and cash flow management.
One of the most shocking findings from the study was the lack of risk awareness – when asked to mention the key risks facing their business, a quarter of respondents couldn’t name any. This figure peaked in Poland, with 62% of respondents not being able to name a risk, followed by 40% in Spain and 32% in France. Ireland was the most risk aware country, with 94% of SME’s being able to identify risks facing their business.
The report also looked at the saved capital of SME’s, and whether it would be sufficient in the case of an unforeseen event stopping business. Over half of the people interviewed had less than two months of revenue reserved for working capital, a quarter had less then a month, and 17% didn’t know how much capital they had.
While the report found that many SME’s can not afford an unforeseen event stopping productivity for more than a couple of months, it also found a relatively low penetration rate for business insurances.
“Much can still be done to ensure that these businesses are placed on a firmer financial footing enabling them to grow and contribute to the wider economy,” said Oliver Mariée, Group Chief Marketing and Distribution Officer at AXA.
“This is part of our ambition to become a long term partner by providing them with the right advice and good planning to ensure that the benefits of insurance are better understood by them”
